Failed Negotiation Process: Analysis and Recommendations

This paper analyzes the mistakes made during a failed negotiation process between an American company and a Japanese company in Osaka, Japan. It discusses the planning, setting of climate, and framing of the negotiation process. Recommendations are provided for how the CEO of the American company should have handled the negotiation process.

Introduction
The purpose of this paper is to analyse what went wrong during a failed negotiation process
between an American company, Videomart, and a Japanese company, Osatech, which
happened in Osaka, Japan. The author will review the planning, setting of climate, and
framing of negotiation process from the American company’s point of view. Based on this
analysis, the author will recommend how the CEO of the American company should have
handled the negotiation process.
What went wrong with the negotiation process?
Planning
One of the mistakes made by the American company was that they did not bring any
translator to the meeting. It not only shows poor preparedness on the part of the American
company, but also leaves scope for miscommunication due to poor translation. Japan has a
very high long-term orientation (88) when compared to the United States (26) (Hofstede
Insights 2019). Whenever Japanese do business with a foreign company, they want the
relationship to be sustainable rather than merely profitable. If the other party comes to the
meeting unprepared and without a translator, it indicates to the Japanese that they are in it for
short-term gains as they have not put in the effort to achieve greater clarity by bringing a
translator.

Figure 1: Comparison of Hofstede's dimensions (Source: Hofstede Insights, 2019)
Moreover, by not bringing their own translator to the meeting, the American company kept
the negotiation process open to bad translation. According to Lewis (2014), Japanese
translators do not give real translations and use euphemisms instead when Americans or
Europeans get too blunt. This is because the power distance in Japan is much higher than in
the United States and Japanese people can’t appear too blunt with their senior managers
(Hofstede Insights 2019). Also, Japanese translators rely a lot on non-verbal cues (body
language) as opposed to American translators and this could have distorted the meaning
conveyed to the Japanese counterparts. This situation could have been avoided if the
American company had brought a translator with them too.
Setting of Climate
Another mistake made by the American company was that they immediately switched to their
business presentations after the exchange of greetings. An important part of the negotiation
process is setting of climate (Pienaar and Spoelstra 1996). When Japanese do business
negotiation, they don’t jump into the business conversation immediately. Experts recommend

that the first 15 minutes of the conversation with Japanese should be reserved for socialising
alone (Lewis 2014). This is a trust building exercise for the Japanese as they form their
opinion about the other party during this socialising session. If the other party does not spend
time on socialising, they appear as ‘insincere’ who cannot be trusted for business (Lewis
2014).
The American company appeared too eager and expected a quick outcome from the meeting.
They were in Japan for only two weeks and expected an outcome. However, Japan is a high-
context culture as opposed to the low-context culture prevailing in the United States. This
means that Japanese have high association and they take time to build relationships and trust
other parties. This is in sharp contrast to the US where relationships are developed only for
the meetings in question and then end quickly (Neese 2016). When dealing with Japanese
businessmen, the focus should be on building trust through socialising. Also, being a low-
context culture, time is not easily scheduled in Japan (Neese 2016). This means that
American companies should not expect quick outcomes to their meetings. Japanese may take
a lot of time (and several rounds of meetings) and repeat themselves often before they arrive
at a decision.
Another mistake in the setting of climate was that the American company repeatedly
focussed on discussing the minor points with lawyers. Japan ranks very high on uncertainty
avoidance index (92) as compared to the US (46) (Hofstede Insights 2019). This means that
Japanese want to be sure of and be prepared for every small detail of the business before
committing to it. While the issue of costs may appear ‘minor’ to Americans, it is not so for
the Japanese. They want to be prepared for every possible uncertain situation by discussing
these minor points. By leaving out these minor details from the presentation and insisting on
having lawyers discuss these details, the Americans offended the Japanese company. This not

only showed them as ill prepared, but also made them appear untrusting of the Japanese. As
discussed earlier, Japanese will never do business with a company which it cannot trust.
Framing
Framing refers to the process of defining the problem in a way that results in win-win
situation for both the parties rather than a win-lose situation (Pienaar and Spoelstra 1996).
The parties involved in negotiation must achieve a common ground through consensus rather
than raising issues of dispute (Strain 2019). A mistake made by the American company was
that they boasted about their company’s capabilities throughout the presentation and did not
focus on the synergies the partnership will bring. When doing business with Japanese, one
should be modest and polite. Japanese don’t trust people who appear boastful (Lewis 2014).
The American company framed the negotiation process in a way that it appeared that the
Japanese company would lose out if they did not do business with them. This did not go
down well with the Japanese who prefer to walk out of negotiation rather than lose face if a
negotiation shows them in inferior light (Zandt 1970).
The process of hiring lawyers in Japan is considered to be a major process and they
tend to take the advice from lawyers related to different decisions that are made. The people
of the US also tend take support from the lawyers in the business related decisions that are to
be made by them. The perceptions of Japanese people are that the lawyers can also be
consulted if there are certain issues that have taken place. Japanese presume that the lawyers
are used in organizations based on bad faith (Brett and Thompson 2016).
Stereotyping is able to affect the intercultural communication levels that take place
within the organizations. Interactive communication skills are considered to be important for
the operations of modern organizations in the industry. The issues that have been highlighted

in the case study are mainly based on the stereotyping that has been done by the Japanese
based on their previous presumptions about the Americans (Gilin, Leiter and LeBlanc 2015).
The case study has depicted some major issues that are faced in the organization
based on trust levels that exist between the people. The most appropriate negotiation strategy
that can be applied in this situation is based on the ways by which the American and Japanese
people are able to control their emotions in an effective way. The levels of issues that are
being faced by the members of the team are based on the expressions that were depicted by
them as a reaction to the questions and issues (Long, Brooks Hill and Normore 2016).
Trompenaars’ model of the national cultural differences is considered to be a major
framework that is used for the development of cross cultural communication. The model is
based on the different dimensions that include, universalism versus particularism,
individualism versus communitarianism, neutral versus emotional, specific versus diffuse,
achievement versus ascription, sequential versus synchronic and internal versus external
control (Linda 2018). The second dimension of neutral versus emotional culture can be
implemented in order to solve the issues that has been highlighted in the case study. The
neutral culture needs to be followed in the negotiation process instead of the emotional
culture that is used by the Japanese. This will help the people who are a part of the meeting to
take decisions within a short period of time (Van Kleef and Côté 2018).

Figure 2 – Trompenaars’ cultural dimensions
Source - (Van Kleef and Côté 2018)
How the negotiation process should have been handled
If I would have been the CEO of Videomart, I would have handled the negotiation process in
a different manner as described below:
1. Preparedness: I would have shown our preparedness for the meeting by studying
about the Japanese culture and Japanese way of doing negotiation before sending a
team to Osaka. Things like non-verbal cues, slow decision making, socialising during
meetings etc. are very important in Japan (Berton 1998) and I would have provided
intercultural training to my team members who would become part of the meeting.
Most importantly, I will bring a translator with me to the meeting to avoid any
miscommunication and achieve greater clarity.

2. Setting of climate: The first 15 minutes of the business meeting should be spent on
socialising and building trust with the Japanese counterparts. Thus, after exchanging
greetings, I would have started the negotiation process with informal talk like talking
about weather or sports. After the initial apprehensions are calmed down, I would
proceed with the presentation process.
3. Not appear too eager: I would not expect a quick decision from Japanese as the time
is a temporal entity for them (Neese 2016). I would ask my team members to be
prepared for multiple meetings even if they involve discussing essentially the same
things.
4. Framing the negotiation as a win-win situation: I would have framed the
negotiation as a win-win situation for both the companies. Instead of only boasting
about what Videomart can bring to the table, I would have focussed on what the
partnership can achieve because of their complementary strengths. This would have
avoided embarrassment to the Japanese counterparts and built trust for further
meetings.
5. Do not show distrust of the other party: The American company is wary of sharing
sensitive information about engineering blueprints without a formal commitment.
However, bringing the topic of lawyers at every minor detail shows distrust of the
other party. As this meeting is crucial for Videomart, I would invite the Japanese
company for another round of discussion with my engineering team. The engineers
will give only an overview instead of confidential information at this stage. If the
Japanese request for additional information, I will politely ask them to sign a non-
disclosure agreement due to the sensitive nature of the information. Japanese
businessmen want other to be sincere and they won’t necessarily get offended if the

issue of sensitive information is brought in the right manner (Monroe-Sheridan 2014).
This will help us to appear sincere, yet polite to the Japanese.
The decision making style of Japanese people is affected by the values and culture that
are followed in the country. This factor needs to be considered by Americans in order to
develop an effective environment in the meetings that have been held. The facial expressions,
voice and posture are considered to be important factors that can help in the members or
employees to take a decision (Long, Brooks Hill and Normore 2016).
The negotiation based process that is followed in Japan is based on the culture and value
that is followed in the country. The businessmen who wish to make proper negotiations in
Japan need to take into consideration the issues that can be faced by them in the country
based on the values and culture in the country. The Japanese people try to negotiate with
respect to the values that are followed in the country. On the contrary, the US people try to
negotiate with respect to the needs in the business environment (Harinck and Druckman
2017).
Conclusion
The purpose of this paper was to analyse what went wrong during a failed negotiation process
between Osatech and Videomart. It was found that the American company showed a lack of
preparedness by not bringing a translator with them. They set the climate of negotiation as
too business-oriented by not socialising with their Japanese counterparts. Moreover, they
framed the negotiation process as a ‘win-lose’ situation rather than a win-win situation for
Osatech. As a CEO, I will change this approach by bringing our own translator, spending
time with the Japanese on socialising activities, and focussing on potential synergies
developed with this partnership. At the same time, I will politely decline to reveal sensitive
information without having a formal agreement to protect our company’s interests.

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